Shell Oil is implementing supply chain software developed specifically for the petrochemicals giant by application vendor i2.
Shell wanted bespoke software because supply chain planning for an oil company requires in-depth knowledge of the market.
Shell opted to work with i2 in early 2002. Two initial components of the supply chain software have been released, and the company is due to go live with the third stage within the next two weeks.
Getting a more detailed view of inventory and demand within the supply chain will allow Shell to overhaul its business, explained Andre Van Acken, director of the firm's advanced planning scheduling programme.
"In the past we have always been reliant on having enough product to meet whatever the customers demand," he said.
"We wanted be able to reduce our stock positions by being able to predict demand over the next 10 days."
According to Van Acken, optimising the volume of oil in the supply chain offers potential savings of around $0.50 (£0.30) per barrel. A barrel of oil is currently worth around $28 (£17).
Since signing up with i2, Shell has had between 10 and 12 of its staff working full-time with the software maker, making sure the nuances of processing crude oil through to stock levels at the refineries are accounted for.
"The project gives Shell a global standard, allowing us to set the optimal performance for all our refineries for up to a month," said Van Acken.
The i2 Demand Manager Downstream Oil module has been piloted in the US, and will be rolled out in Europe over the coming months.
A second module, i2 Supply Chain Strategist Downstream Oil, uses modelling and simulations to improve supply chain operations. Shell is currently alpha-testing a refinery scheduling system.
For its part, i2 has been able to build a downstream oil version of its supply chain software that it hopes to sell to other oil firms.
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